MARYLAND LONG-TERM CARE PHARMACY TO PAY MORE THAN $5.3 MILLION OVER ALLEGED MEDICARE AND MEDICAID BILLING FOR DRUGS WITHOUT VALID PRESCRIPTIONS

A Maryland-based long-term care pharmacy company has agreed to pay more than $5.3 million to resolve federal allegations that it billed Medicare and Medicaid for prescription drugs dispensed to assisted-living residents without valid prescriptions.

Remedi SeniorCare Holding Corporation, headquartered in Towson, Maryland, entered into a civil settlement with the United States resolving allegations under the False Claims Act involving claims submitted between January 1, 2015, and March 31, 2021.

According to the Justice Department, Remedi allegedly submitted or caused claims to be submitted to Medicare and Medicaid for prescription medications that lacked valid prescriptions but were still dispensed to residents of assisted-living facilities in multiple states.

The settlement does not constitute an admission of liability by Remedi, and the United States has not obtained a judicial determination that the company violated the law. The agreement specifically states that the resolved claims remain allegations and that Remedi’s decision to settle is not an admission of wrongdoing.

The federal consent judgment establishes a settlement amount of $5,389,780, all characterized as restitution, along with interest calculated at 4.5% annually beginning May 6, 2026.

The agreement also calls for an additional $110,220, plus applicable interest, to be paid to participating Medicaid states under separate state settlement agreements. Taken together, the federal and state settlement amounts total $5.5 million before interest.

The federal portion will not be paid in a single lump sum.

According to the settlement agreement, Remedi’s first payment of $1,185,055.16 was due no later than September 11, 2026, with the remaining balance scheduled to be paid over time.

The Justice Department said the structure was based on Remedi’s ability to pay. The agreement states that the amount accepted by the government represents a compromise based solely on the company’s financial condition as disclosed to federal authorities.

If Remedi or its assets are sold before the settlement and applicable interest are fully paid, the unpaid balance becomes due at the time of the sale.

The agreement also gives the government enforcement options if Remedi defaults on the payment schedule. After notice, the company would have 21 days to cure the default. An uncured default could make the remaining balance immediately due and trigger 12% annual interest compounded daily on the unpaid amount.

The allegations concern a basic safeguard at the center of medication dispensing: a valid prescription.

Long-term care pharmacies routinely serve residents of assisted-living and other residential-care settings, where patients may receive numerous medications and depend heavily on pharmacy, nursing, and medical staff to ensure prescriptions are properly authorized, documented, dispensed, and billed.

The Justice Department alleged that Remedi sought federal health-program reimbursement for drugs that did not have valid prescriptions supporting their dispensing.

That alleged conduct raised two separate concerns identified by federal officials: the integrity of Medicare and Medicaid billing and the safety of residents receiving prescription medications.

The case originated through the qui tam, or whistleblower, provisions of the False Claims Act.

Former Remedi employees Maureen Gearhart and Laura Griffieth filed the civil action on December 2, 2020, in the U.S. District Court for the Southern District of Ohio.

The case is captioned United States ex rel. Gearhart & Griffieth v. Remedi SeniorCare Holding Corp., et al., No. 1:20-cv-970, before U.S. District Judge Douglas R. Cole.

Under the False Claims Act’s qui tam provisions, private individuals with information concerning alleged fraud against the federal government may bring an action on behalf of the United States.

If the government obtains a recovery, qualifying whistleblowers may receive a portion of the proceeds.

Under Remedi’s settlement, Gearhart and Griffieth are entitled to 20% of each federal settlement payment received by the United States, with their share distributed as the company’s scheduled payments are collected.

The agreement also contains separate resolutions involving attorneys’ fees and costs, along with individual retaliation claims asserted by Gearhart.

Federal authorities preserved several categories of claims outside the settlement.

The agreement does not release potential criminal liability, tax liability, claims involving conduct outside the covered allegations, liability of individuals, personal-injury claims, or certain administrative enforcement rights.

It also does not prevent federal authorities from pursuing matters unrelated to the conduct specifically resolved by the agreement.

Remedi also agreed not to seek payment from health care beneficiaries, their families, legally responsible individuals, sponsors, or third-party payers for health care billings included in the covered conduct.

The company further agreed not to resubmit previously denied Medicare or state claims associated with the conduct or pursue appeals of those denials.

The settlement contains financial-disclosure provisions intended to protect the government’s recovery.

Remedi provided sworn financial information to the United States, and the government relied on those disclosures when agreeing to the settlement amount.

If federal authorities later determine that Remedi failed to disclose assets or made material financial misrepresentations affecting its estimated net worth by $500,000 or more, the government may seek additional remedies, including rescinding the agreement or collecting additional amounts tied to undisclosed assets.

The resolution resulted from a coordinated federal and state effort involving the Justice Department’s Civil Division, Commercial Litigation Branch, Fraud Section, and the U.S. Attorney’s Office for the Southern District of Ohio, with assistance from the Department of Health and Human Services Office of Inspector General and the Ohio Attorney General’s Office.

Fraud Section Senior Litigation Counsel Laurie A. Oberembt and Assistant U.S. Attorney Brandi Stewart handled the matter for the government.

The Justice Department continues to use the False Claims Act as a primary civil enforcement mechanism in cases involving alleged improper billing to taxpayer-funded health programs.

Unlike a criminal prosecution, a False Claims Act settlement can resolve alleged civil liability without a defendant being convicted of a crime or admitting that the government’s allegations are true.

That distinction is central to the Remedi case.

The government alleged that prescriptions dispensed over a period exceeding six years lacked valid authorization while claims were submitted to Medicare and Medicaid. Remedi agreed to a multimillion-dollar settlement to resolve those civil allegations, but there has been no determination of liability.

The case also demonstrates the role former employees can play in federal fraud enforcement.

Gearhart and Griffieth brought their allegations under a statute that allows insiders and other private parties to expose suspected fraud involving federal funds and potentially share in recoveries obtained on behalf of the government.

That process resulted in a consent judgment exceeding $5.3 million at the federal level, additional payments to participating Medicaid states, and a continuing payment structure that will remain enforceable until the settlement obligations and applicable interest are satisfied.

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